What is DTI and why is it important?

- Finance
06 May 2026

What is DTI and why is it important?

DTI (Debt-to-Income ratio) is a financial metric that shows the relationship between your monthly income and your existing debt obligations.

Simply put:
how much you earn vs how much you already pay in debts.

Banks use this показатель to evaluate your ability to repay a new loan.

How is DTI calculated?

DTI is calculated using a simple formula:

DTI = (monthly debt payments / monthly income) × 100%

Example:

Your monthly income: 1000 AZN
Your monthly debt payments: 400 AZN

DTI = 40%

This means that 40% of your income goes toward paying debts.

Why is DTI important?

When reviewing your loan application, banks pay close attention to your DTI because it reflects your repayment capacity.

Low DTI:

higher chances of loan approval
better chances to get the desired loan amount

High DTI:

higher financial burden
possible rejection or reduced loan amount

What is a good DTI?

0–30% — excellent
30–40% — acceptable
40–50% — risky
50%+ — high risk

How to reduce your DTI?

If your DTI is high, you can improve it by:

paying off existing loans
reducing monthly payments (refinancing)
increasing your income
avoiding new debts

How banks.az helps you choose

banks.az is a financial supermarket and does not provide financial services. The platform helps you compare offers from different banks and choose the most suitable option.

Before taking a loan —
compare and make an informed decision.

Conclusion

DTI is one of the key indicators of your financial health. Understanding it will help you improve your chances of loan approval and avoid excessive debt burden.